Ridesharing The power to see the road ahead By BMaaS Contributor Posted on March 28, 201811 min read View original post.Car ownership isn’t always convenient, but hailing one on your smartphone is. Mobility services, such as ridehailing, carsharing, rentals and carpooling, are showing growth. This is underpinned by a combination of enabling technologies and changing social preferences, with millennials and centennials more attracted to access over ownership. We estimate mobility services will grow by an average of 14% per year from 22 million vehicles in 2016 to 130 million by 2030 to represent 8% of total vehicles on the road globally, predominantly in cities.This means the car could soon become the most valuable connected device available.Battling disruption with serviceThe shift from consumers buying cars to renting time with them is undeniable, and car corporations are arming themselves for the upcoming tech race. Technology is increasing in all parts of the auto value chain, from connecting vehicles and infrastructure to enabling on-demand services. Even as the biggest ridehailing companies lose money, an estimated $35 billion has been invested in ridehailing startups between 2012 – May 20171.The reaction from car companies has been a combination of investments, strategic partnerships and independent brand or service launches – seeking to corner the market on mobility services that consumers demand, within—and beyond—the car. Financial viability is often unproven or unprofitable, but the industry is focused, as companies target first-mover advantage and fear being left behind in this long-term game.In the European market, we’re starting to see a few major themes take shape, primarily around how owned assets—by fleet and independent owners alike—are being used in evolving rental, rideshare, and carpooling business models. Let’s take a look at how cars are becoming the next collaborative trend, following in the treads of the shared bike movement that’s taken off across cities.The rental market: Drive when you need toOne-Way Flexible CarsharingOne-way flexible carsharing users rent cars by the minute or the kilometer. The majority of one-way carsharing business models are operated in city centres, where in London for example, the average hire duration is 30 minutes2. It’s convenient for users and fleet operators because customers pick up the car where the previous renter dropped it off, and can leave the vehicle anywhere within a defined operating area. The biggest players in the space are joint ventures between OEMs and car-rental companies, garnering millions of members across continents.One-Way Fixed CarsharingIn one-way fixed carsharing, point-to-point trips start and end at dedicated parking spaces or lots for cars. This offers users the convenience of making one-way trips, but requires dedicated operational infrastructure—such as available parking spots and electric vehicle charging options as many of the business models currently use electric vehicles.Round-Trip CarsharingFor years, the traditional car rental has been evolving into an hourly business, as several car rental companies launch or acquire their own hourly rental offerings. Vehicles are rented and returned to the same location, offering customers the convenience of renting vehicles close to where they live or work and without the need to visit a car rental kiosk or worry of finding parking space upon returning the vehicle. Average rentals are six hours in urban cities like London3 and, not surprisingly, rental car companies are leading the market. Rental car companies in both the U.S. and Europe are establishing their carsharing offers in hundreds of cities and are growing their member base, showing how rental companies are evolving to meet new consumer demands.Peer-to-Peer CarsharingCarsharing isn’t just for fleet vehicles. Consumers are increasingly renting out their private vehicles through peer-to-peer apps as well. Car companies are also getting involved in P2P initiatives, investing in and creating their own services to get into the game. A few benefits of the peer-to-peer model is that renters and rentees can set their own prices that are variable based on demand, and, since it’s localised, P2P enables many distributed pick-up and drop-off points.Ridehailing and ride sharing services: Combining and gaining market shareRidehailing with Private Cars and TaxisThe rapid rise of ridehailing services has been supported by several factors, most notably the rising investment, cost effectiveness, convenience, and availability of the services. While still predominantly used by private customers, ridehailing startups are expanding by taking increased revenue from business travelers. In the US, business expense receipts are reflecting an increase in ridehailing app receipts, with corresponding declines in car rental and taxi receipts over the same time period.On the taxi hailing side of the ridehailing business, automotive companies are partnering with taxi ridehailing apps. The partnerships are creating mergers and accomplishing acquisitions to target this opportunity while gaining new customer insights as customers begin to move from ownership to usage. This increasing competition across private and taxi ridehailing services has been good for consumers in the short term, increasing availability and driving down prices, but the continued consolidation of these apps is leading to increasingly local and regional dominant players.From Carpooling to Technology Enabled RidesharingCompanies are transforming old-fashioned carpooling by providing a trusted network of technology-enabled ridesharers who pick-up and drop each other off in their own cars. Technology such as apps show who’s driving where, when, how many seats are available and what the price is. The core ridesharing business models include fixed long, dynamic short distance, and corporate carpooling business models.The shared journey for consumers – and businessesWith the rise of new business models, consumers are joined by original equipment manufacturers, start-ups, fleet management, and rental car companies in the pursuit of on-demand mobility services. However, when it comes to mobility it’s not a cut-and-paste solution. Every city is different, depending on local preferences, government policies, and available transportation alternatives in particular.For companies in expansion mode and entering a market, they need to ensure they comply with local regulations and continuously monitor and adhere to any changing regulations and laws. A failure to do this could have business and reputation impacts, as well as potentially slow down the rate of expansion for those companies and other mobility service providers.The question is: How will regulation and local preferences change as the mobility services market continues to grow at pace?Authored by:Martyn BriggsAutomotive ResearchBofA Merrill Lynch Global ResearchBeijia MaThematic Investing ResearchBofA Share on Facebook Share0 Share on TwitterTweet0 Share on LinkedIn Share Send email Mail
Mapping a route to a future success in the new automotive ecosystem View original post. Digitally-enabled car-sharing and ride-hailing is set to become a key driver …
